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Dear
Chris,
Our
CEO wants us to implement a variable pay program based
largely on our competency assessment. I'm worried
- I'm afraid it might diminish the effectiveness of our
assessments on development planning if employees and
managers know they will impact pay. But my boss
insists that this is what he wants. What should I
do?
-
Sleepless in San
Francisco
Dear
Sleepless:
Your
concerns could be valid; competency-based compensation
programs are high stakes initiatives. While they
can have a positive business impact, they have the
potential for disastrous results if not implemented very
carefully. We've participated in a few successful
compensation programs based at least partially on
competence. Here are a few
suggestions:
1.
Make sure you know WHY your CEO wants to implement this
program. Do you know what keeps him up at
night? What's the business need he's trying to
meet? What specifically is he trying to
accomplish? What key performance indicators is he
trying to impact? What are the aspects of
skills-based variable pay that interest him the
most? You should be able to incorporate the
answers to these questions into your planning efforts
for either the variable pay program he's advocating, or
an alternative that can get the results he wants at a
lower cost and with less risk.
2.
Take a very close look at the content and wording of the
competencies you'd be assessing. Are there very
clear behavioral descriptions that can be observed or
measured reliably? Are you certain that you've
included the most critical skills for all jobs to be
included, and that they're correctly weighted?
Have you validated the skills with a range of subject
matter experts? Have you examined the predictive
validity of each skill to ensure correlation with
performance? Are the skills for each role
similarly detailed so that scoring will be
consistent?
3.
Understand every detail of the assessment process and
its impact on results. How will the initiative and
its purpose be communicated? How will managers and
employees be trained? What types of assessment
will you use and in what order? Who has the final
say if an employee and manager have differing views of
proficiency on a skill? How will the rating scale
be worded and used? What means will you use to
prevent "rating inflation"?
Of
course, this is just a brief list of considerations, but
it should give you a starting point. Keep in touch
and let me know how you progress!
-
Chris Hipple
Director
of Workforce Solutions
Avilar,
Inc.
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